On March 1, 2016, a former employee of the Debtors filed a class action against the PE Owner, PE Firm, Funds and PE Affiliates, claiming, among other things, violations of the Worker Adjustment and Retraining Notification Act, 29 U.S.C. Businesses thinking of relocating to the state or expanding operations into the state first must consider the potential financial consequences associated with the Act. This Special Report analyzes the revisions to the Act, compares an employer’s obligations under the Act with those under the federal Worker Retraining and Notification Act (WARN), 29 U.S.C. New Jersey law will now require 90 days’ advance notice. Nevertheless, the California Court of Appeal ruled last week that the same result would apply under the California WARN Act. Federal WARN Act. (ERISA), the National Labor Relations Act, 29 U.S.C. Under the terms of the federal WARN Act, a 60 day notice was not required, since the federal statute is triggered only by an actual “employment loss.” However, the California WARN Act does not contain the same statutory exception as its federal counterpart. The WARN Act defines loss of employment as employment termination, a layoff exceeding six months or the reduction of working hours by 50% in six months. Accordingly, we recommend that employers seek counsel prior to any layoff, relocation, or termination of operations to make sure that they are in compliance with the California and federal WARN Acts. Without defining severance, the Act describes the term as follows: Severance under this subsection shall be regarded as compensation due to an employee for back pay and losses associated with the termination of the employment relationship, and earned in full upon the termination of the employment relationship, notwithstanding the calculation of the amount of the payment with reference to the employee’s length of service. An employer is covered by the WARN Act if, among other things, it has (1) 100 or more employees (excluding certain part-time employees) or (2) 100 or more employees who in the aggregate work at least 4,000 hours per week (excluding overtime hours). In this situation, it is unclear what would happen if an employer decided not to provide the full 90 days’ notice. MacIsaac v. Waste Management Collection and Recycling, Inc. To the extent a collective bargaining agreement, company policy, or employee agreement provides for severance, the Act requires the employer to pay whichever is greater. The Illinois WARN Act covers employers with 75 or more employees. Thus, a company with operations at five separate locations, with a loss of at least 10 employees (whether full-time or part-time) at each location, arguably may be subject to the notice and severance pay requirements under the elimination of the “single place of employment” qualification and the inclusion of “any facilities located in this State” to the definition. The new definition eliminates the “single place of employment” qualification: Establishment means a place of employment which has been operated by an employer for a period longer than three years, but shall not include a temporary construction site. Illinois WARN Act. The amended law requires an employer to provide an employee the severance payment under the law, a collective bargaining agreement, or an employer policy for any other reason, whichever is greater. We allege that Falcon Transport and Counterpoint Capital, as a single employer laid off approximately 700 employees at their facilities without providing its employees with advance written notice. The WARN act has several regulations that shape who the law should be applied to. WARN and California’s mini-WARN require certain larger employers to give advance notice of mass layoffs or plant closings that will result in a certain number or percentage of employees losing their jobs.Under federal law, employers are covered only if they have at least 100 full-time employees or at least 100 employees who work a combined 4,000 hours or more per week. Falcon Transport-In April 2019 we filed a complaint under the WARN Act against Falcon Transport and its Parent Company Counterpoint Capital. (Pub. The purpose behind the transfer exclusion is similar. Notification (WARN) Act, Public Law 100-379 (29 U.S.C. A company must determine whether the notice and severance obligations apply to any contemplated action to ensure that the company maintains sufficient funding to meet any obligations imposed by the statute, among other considerations. A mass layoff is a reduction in force resulting in job loss at a single site of employment for 500 or more full-time employees, or for 50 to 499 full-time employees, if the number of employees laid off makes up at least 33% of the employer’s active workforce. In MacIsaac v. Waste Management Collection and Recycling, Inc., the issue was whether the transfer of employees from one employer to another, without a change in the employees’ position, pay, or benefits, required a California WARN Act notice. Indeed, before expanding operations to include locations within the state or starting a new business venture within the state, a company may consider its overall business goals and the challenges to any efforts to reorganize, relocate operations, or even cease operations. This poses operational challenges to companies possibly facing decreased productivity, lost contracts, sudden changes in the economy or cash flow, and sooner-than-planned worker departures. (B) the employer offers to transfer the employee to any other site of employment regardless of distance with no more than a 6-month break in employment, and the employee accepts within 30 days of the offer or of the closing or layoff, whichever is later. WARN ACTS. Significantly, it poses the most substantial challenges to businesses seeking to reorganize, transfer operations, or reduce headcount. The California WARN Act (short for Worker Adjustment and Retraining Notification Act) is a regulation that requires employers to provide workers and local government officials with at least sixty (60) days notice before a mass layoff, a plant closure or a major relocation. The amendment also mandates payment of severance (in an amount of one week for each full year of employment) to any employee affected by the covered action. In general, this statute is designed to require employers to provide employees with 6o days notice of layoffs due to plant closings, sale of business or financial hardship. Illinois WARN defines notice-triggering events differently than federal WARN. This interpretation likely would result in employers eliminating any severance policy that provided severance beyond New Jersey law. The purpose of WARN was to lessen the impact of such actions on individuals, their families, and their surrounding communities. Thus, this is a welcome and positive decision for California employers. The WARN Act also includes an exception to this notice requirement where an employer sells all or part of its business and the employees are hired by the buyer. (Pub. Employees entitled to notice under the WARN Act include managers and supervisors, hourly wage, and salaried workers. Further, this holding only relates to mass layoffs under the California WARN Act. Employees—Employees who have worked less than 6 months in the last 12 months and employees who work an average of less than 20 hours a week do not qualify as “employees” under WARN. Under the original law, the employer must pay severance of one week for each full year of service regardless of whether one day or 59 days of notice was provided. Notice is not required in this instance if an employer can … § 151, et seq. By including “or reporting to” in the definition, the Legislature arguably intended to include terminations at other facilities only if the employees at the other location were “reporting to the establishment.” For instance, if an employer had two locations and 30 employees at each will be terminated, this arguably would be a mass layoff only if the employees at one of the locations were reporting to the other establishment. The severance could be offset by any back pay provided by the employer under WARN. The Worker Adjustment and Retraining Notification Act (WARN) was enacted on August 4, 1988 and became effective on February 4, 1989. the employer offers to transfer the employee to a different site of employment within a reasonable commuting distance with no more than a 6-month break in employment; or (B) the employer offers to transfer the employee to any other site of employment regardless of distance with no more than a 6-month break in employment, and the employee accepts within 30 days of the offer or of the closing … For example, if your employer offers you a transfer to another employment site to which you could reasonably commute, with less than a six-month break in your employment, you may be reluctant to take it. WARN Act Recommendations. Neither the statutory language nor the committee statements provide sufficient context or guidance for employers faced with the prospect of a mass layoff to determine the extent of their notice and severance payment obligations. 2d 1 (1987). Although the statute already defines employer, a separate provision has been added, likely to include private equity or venture capital firms within the definition. A temporary layoff of six months or less is not an "employment loss" under WARN. Illinois WARN applies to employers with 75 or more full-time employees (excluding part-time workers) and requires employers to provide 60 days advance notice of pending plant closures or mass layoffs. § 2101(a)(6). Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 107 S. Ct. 2211, 96 L. Ed. ©2020 Jackson Lewis P.C. The notices cover the possibility, but not the certainty, of job losses. The Act revises four defined terms: (1) establishment; (2) full-time employee; (3) part-time employee; and (4) mass layoff. Fourth, if an employer seeks a release of claims as part of any severance payment, the company should include additional consideration to support the release of claims or modifying existing severance plans to strengthen its argument that additional consideration has been provided. Some argue that a mass layoff should not be interpreted so expansively. No court challenge to the new law has been announced, but certain laws appear to provide a basis for a challenge, e.g., the Employee Retirement Income Security Act, 29 U.S.C. As noted above, Federal WARN requires only 60 days’ advance notice of a covered employment action. On December 12, 2005, in MacIsaac v. Waste Mgmt. If you have over 100 full time employees, the WARN Act will apply to you regardless of being public or private, for-profit or not-for-profit. The statute previously defined full-time employees and part-time employees as follows: [Full-time employee means an employee who is not a part-time employee. In 1988, Congress passed the Worker Adjustment and Retraining Notification (WARN) Act to provide workers with sufficient time to prepare for the transi- tion … These changes expand the Act’s coverage to previously exempted employers and employment actions, place differing obligations on employers with multistate operations that include locations within the state, and may create confusion if left as is. In the event of a sale, “an employee of the seller (other than a part-time employee) as of the effective date of the sale shall be considered an employee of the purchaser immediately after the sale.” 28 U.S.C. Would the employer owe each employee 89 days of back pay or is the additional four weeks of pay the only penalty? According to a report, New Jersey Mandates Severance Pay For Workers Facing Mass Layoffs, bill sponsor Senator Joseph Cryan stated, “When these corporate takeover artists plunge the companies into bankruptcy, they walk away with windfall profits and pay top executives huge bonuses, but the little guys get screwed.”. These transferred employees performed the same work for the same rates of pay and retained the same benefits and level of seniority that they had at Empire Waste. That’s a mouthful! In that case, the Supreme Court held that ERISA did not preempt the Maine statute because the statute concerned employee benefits (not regulated by ERISA), rather than employee benefit plans (governed by ERISA). Under the expanded scope of coverage and new financial burdens on employers, employers seeking to restructure or remove business operations within the New Jersey will face increase risks. The definition’s vagueness is open to many possible interpretations. Posted in WARN Act. In general, this statute is designed to require employers to provide employees with 6o days notice of layoffs due to plant closings, sale of business or financial hardship. The language, which lacks any qualifiers, presumably applies to any employees, including highly compensated executives, affected by a covered employment action. The WARN Act is a federal statute, but a plethora of states have implemented similar legislation to apply to workplaces with less than 100 employees. The WARN Act generally requires an employer to provide 60 days’ written notice of a plant closing or mass layoff. THE WARN ACT EMPLOYEES NOT COUNTED UNDER WARN When determining whether or not your company’s layoff or plant closing falls within the WARN requirements, the following employees are not counted: • Part-time workers; • Workers who retire, resign, or are terminated for cause; • Workers who are offered a transfer to another site of Unfortunately, there is a tremendous risk if employers are incorrect. In general, employers are covered by the WARN Act if they have 100 or more employees, excluding employees who have worked less than six months during the last 12 months or who work an average of less than 20 hours per week. The additional expense of the mandatory severance pay requirements may devastate an employer trying to remain in business. Just because a company issues WARN Act notices doesn't mean furloughs are guaranteed or every employee who receives a notice will be furloughed. WARN Act Provisions When workers are spontaneously laid off without prior notice, they can face enormous financial and emotional hardship. (“WARN”) Act, 29 U.S.C. (Connecticut law also requires employers, in some closing situations, to continue to pay for health care coverage for employees and their dependents for up to 120 days.) The new the definition, coupled with the revised definition of establishment (i.e., the apparent elimination of the single or contiguous site requirement), will result in more mass layoffs occurring under the Act. A. New Jersey prohibits waiver of any severance payments absent approval by the Commissioner of the Department of Labor or a court of competent jurisdiction. Note: Executive Order N-31-20 (PDF) temporarily suspends the 60-day notice requirement in the WARN Act. Illinois has a version of the WARN act with slightly different rules, but the same 60-day notice requirement as federal law. Prior to this decision, there was no California case construing the terms of the California WARN Act, and it was unclear whether employee transfers to a different company as part of a sale or merger would require a California WARN notice, even when a federal WARN notice was not required. Definitions, notice timelines, employers’ severance obligations, and payment requirements for failure to provide notice are among the provisions revised. Those regulations are fairly simple to understand. The law takes effect on July 19, 2020. WARN Act: The Worker Adjustment and Retraining Notification Act That's a mouthful! The amendment eliminates the definitions of full-time employee and part-time employee and, unlike its federal counterpart, focuses solely on the total number of job losses to determine whether a mass layoff or transfer or termination of operations has occurred. What is clear is that, effective July 19, 2020, any reduction in force of at least 50 employees at a single place of employment will require 90 days’ notice and severance. First, the Court of Appeal limited its holding to the situation in which transferred employees retain their former positions with no change in the terms of their employment. Recipients should consult with counsel before taking any actions based on the information contained within this material. Establishment may be a single location or group of locations, including any facilities located in this State. Per Chapter 4, Part 4, Sections 1400-1408 of the Labor Code, WARN protects employees, their families, and communities by requiring that employers give a 60-day notice to the affected employees and both state and local representatives prior to a plant closing or mass layoff. In general, your employer must time the notice so that it reaches you 60 days before the closing or layoff date. Moreover, any employee suffering a termination of employment is counted toward whether a mass layoff, transfer, or termination of operations has occurred. Thus, an employer who fails to give notice under the Act is essentially immune from any liability as long as they pay all compensation due their employees through their last day of work.“ If interpreted this way, any time at least 50 employees suffer a termination of employment within a 30- or 90-day period in New Jersey would trigger the notice and severance requirements under the Act. The effect on potential business operations in New Jersey appears uncertain. Part-time employee means an employee who is employed for an average of fewer than 20 hours per week or who has been employed for fewer than six of the 12 months preceding the date on which notice is required pursuant to the act. Employers with operations in New Jersey must undertake a broader analysis of the legal implications associated with any covered employment decision that results in the termination of at least 50 employees. Jackson Lewis has summarized in a chartthe obligations under the Act as compared to those under WARN. L. 100–379, § 2, Aug. 4, 1988, 102 Stat. 's 950+ attorneys located in major cities nationwide consistently identify and respond to new ways workplace law intersects business. This notice must be provided to either affected workers or their representatives (e.g., a labor union), to the State Dislocated Worker Unit, and to the appropriate unit of local government. Unfortunately, the Legislature’s intent in including the requirement that the employees be “at or reporting to” the establishment is unclear. The WARN Act defines loss of employment as employment termination, a layoff exceeding six months or the reduction of … For instance, because the definition of mass layoff is substantially different under New Jersey law than WARN, an employer might have a mass layoff that only triggers New Jersey law. The WARN Act is a paper lion because it limits employees’ damages to their loss of wages and benefits over the last 60 days of their employment. If the latter, then employers may choose to provide less notice and simply pay the four weeks of pay plus severance. Under federal WARN, covered employers must provide 60 days’ written notice to affected employees of a mass layoff, or a plant closing. T. 619.237.5200 | F. 619.615.0700, Copyright 2015 - 2020 Paul, Plevin, Sullivan & Connaughton LLP | Disclaimer Indeed, the Court described the Maine statute as an “unexceptional exercise of the state’s police power” in the establishment of a minimum labor standard. Whether the revisions to these core definitions of the law also mean that a reduction of 50 or more employees at “any facilities located in the State” requires 90 days’ notice and severance pay remains unclear. Jackson Lewis has summarized in a chart the obligations under the Act as compared to those under WARN. Therefore, severance cannot be paid as a continuation of wages over a period of time; it must be paid in a lump sum on the first regularly scheduled pay day following the employee’s final day of employment. The Worker Adjustment and Retraining Notification Act (WARN Act) is administered by the U.S. Department of Labor Employment and Training Administration (DOLETA). The Federal WARN (Worker Adjustment and Retraining Notification) Act requires businesses who employ over 100 workers to provide their employees 60 days notice in writing of a mass layoff AND to pay the employees 60 days of pay. Under the California Worker Adjustment and Retraining Notification Act (California WARN Act), covered employers must give 60 days’ written notice to employees who are affected by any mass layoff, relocation, or substantial termination of operations. Under the Worker Adjustment and Retraining Notification Act (WARN Act), most employers that have 100 or more employees must give 60-day advance written notice of covered plant closings and covered mass layoffs. For more information, please contact Mr. Betts, Mr. Minguet, or any Paul, Plevin attorney at 619-237-5200. This may still not be enough. The WARN Act is The Worker Adjustment and Retraining Notification Act. In this case, the transferred employees … Mass layoff means a reduction in force which is not the result of a transfer or termination of operations and which results in the termination of employment at an establishment during any 30-day period for 50 or more of the employees at or reporting to the establishment. Empire Waste also agreed to transfer a number of its garbage truck drivers to North Bay. Often, such restructuring results in personnel layoffs or plant closings, implicating the Worker Adjustment and Retraining Notification Act (WARN), which Congress enacted in the mid-1980s to require employers to provide advance warning of certain mass layoffs and plant closings. Certainly, the employer would have to pay each terminated employee one week of severance for each full year of employment and an additional four weeks of pay. Notice shall also include general information regarding any payouts, severance packages, job relocation opportunities and retirement options that will be offered to the dislocated workers. Employers should consult with legal counsel before taking any action, especially when it involves compliance with the notice requirements under the Act. Companies may have to offer more than the severance guaranteed in the Act to obtain an effective release of claims. Courts differ as to whether WARN damages for violating the notice period requirement should be calculated by calendar days or workdays.). Accepting a reassignment or transfer likewise is not considered an involuntary termination, nor is declining a reassignment or transfer within reasonable commuting distance from home, in most circumstances. The amended New Jersey WARN Act will impose significantly stricter obligations (including potential individual liability) and make New Jersey the first state to mandate severance pay to employees separated as a result of certain layoffs, transfers, or terminations of operations—even if the employer provides the requisite advance notice. Collection & Recycling, Inc. (2005) __ Cal.App.4th __, 2005 Cal. Previously, the Act followed WARN and required 60 days’ written notice; this has been increased to 90 days’ written notice under the Act. By Timothy D. Speedy, James M. McDonnell and Justin B. Cutlip. The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: Section 1. The California WARN Act requires covered employers to provide advance notice to employees affected by plant closings and mass layoffs. Eliminating the distinction expands the scope of the Act’s coverage and when an event triggers an employer’s notice and severance obligations. Full-Time Employee/Part-Time Employee. Please contact a Jackson Lewis attorney if you have any questions. AN ACT to amend the labor law, in relation to enacting the New York state worker adjustment and retraining notification (WARN) act Became a law August 5, 2008, with the approval of the Governor. This case did not involve a transfer of employees due to relocation or substantial termination of operations under the California WARN Act. If you refuse to be transferred, you do not have an employment loss covered by the WARN Act. The WARN Act requires advance notice of loss of employment so workers have time to look for another job or receive training in another occupation. For instance, any multistate, multilocation, or multifacility operation that implements a covered employment action (i.e., mass layoff, termination of operations, or transfer of operations) arguably must meet the notice and severance obligations in the Act. The Act requires employers to provide “severance pay equal to one week of pay for each full year of employment” to each employee affected by a mass layoff, transfer, or termination of operations. As part of a negotiated purchase agreement, North Bay Disposal Corporation agreed to buy equipment, including garbage trucks, from Empire Waste. Businesses already operating within the state may want to explore accelerating or designing restructuring plans to avoid the burdensome financial consequences associated with these provisions before the Act’s effective date. Although meant to provide advance notice to employees, the law as drafted arguably could encourage employers not to provide notice when federal WARN is not triggered. The purpose of the Act is to give employees time to adjust to the prospective loss of employment, seek other positions, and, if necessary, seek retraining. If not, each location would constitute a separate establishment and there would be no mass layoff, because each establishment had only 30 employees suffer a termination of employment. For example, furloughs expected to last less than six months do not trigger the WARN Act. The California WARN Act defines a “mass layoff” as any layoff during a 30-day period affecting 50 or more employees. Employers Covered by the WARN Act: A business is covered if it employs at least 100 full-time employees or a combination of at least 100 part-time and full-time employees who work a total of 4000 hours per week. 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